The national political system is a cauldron boiling with millions of dollars in new money, much of it coming from newly established, non-profit, tax-exempt organizations. Nearly every campaign for federal office is affected by the combined effect of the so-called Super PACs, authorized by Section 527 of the Tax Code, and the Supreme Court’s Citizens United ruling, which opened the spigots of corporate coffers to spend on behalf of candidates, overturning a century-old statute banning such spending.
When political operatives decided they wanted to raise corporate money without having to disclose where it came from, they looked to another type of non-profit and tax-exempt entity called the “social welfare” organization, which gets its exemption under Section 501(c)(4) of the Code. Both parties set up these entities to collect and spend political money because, unlike 527s, which are political organizations, the (c)(4)s as charities do not have to report the names of their donors.
